INDIA: Scotch whisky progress on tax barriers

The Scotch Whisky Association has hailed new progress in its battle to force Indian states to reduce import tax on spirits, but the body has rejected claims that the issue is settled.

The Association's comments follow remarks made by Vijay Rekhi, president of Indian drinks giant United Spirits, who told just-drinks last week that there is "no discrimination" between foreign and domestic whisky in India.

A Scotch Whisky Association (SWA) spokesperson agreed that progress has been made on import tax. "We have seen some encouraging progress towards fairer spirits taxation at State level within India, for example in Maharashtra, Karnataka, and Goa," he told just-drinks this week.

"Significant issues, however, remain," he said.

Maharashtra and Goa, which represent half of India's spirits consumption, were singled out by the EU and SWA as renegades last autumn.

India is viewed as a crucial emerging market for Europe's wine and spirits, and particularly Scotch. EU exports to India are valued at an annual EUR57m (US$83m) for spirits and EUR11m for wine, according to industry figures.

Scotch exports to India rose by 36% to GBP33m in 2007, the latest full-year figures from the SWA show.

While the SWA's army of international trade experts is pleased about the progress made on tax so far this year, the trade body remains cautious.

The SWA spokesperson said: "Our current focus, for example, is on securing fair and equal access to Andhra Pradesh and Tamil Nadu, where imported spirit drinks continue to face forms of tax or market access discrimination in relation to domestic products."

Andhra Pradesh is a key state, because it accounts for roughly one fifth of India's annual spirits consumption.

Despite differences of opinion between the Scotch distillers and their Indian counterparts, the SWA maintains that both sides can work together to get state taxes on alcohol reduced.

"There is a broadly common agenda for both imported and domestic spirits sectors as we seek a more rationalised and harmonised alcohol tax system at State level," said the SWA spokesperson.

"A more rational excise structure which could be applied across India could bring considerable benefits for State governments, industry and consumers."

Many Scotch whisky delegates at last week's World Whiskies Conference in London cited India as the most promising market for their products.

Vijay Rekhi, who spoke at the conference, said: "We estimate that 100m young people in India will attain legal drinking status in the next five years. It is a marketer's delight."

Whisky accounts for 60% of spirits consumption in India, Rekhi said. It has stronger roots in India than in some other emerging markets across Asia, such as China, after having been introduced to the country when a part of the British Empire.

Domestic competition to Scotch is strong, however. Rekhi said that Indian whisky sells around 110m cases annually, representing around 99% of the market.

Having expected to fly into a resolutely downbeat mood at this year's Tax Free World Association expo in Cannes, just-drinks discovered that many drinks companies are nurturing a growing sense of opti...

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